Speaker 1: From the heart of where innovation, money and power collide
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Caroline Hyde.
Speaker 2: And Ed Ludlow.
Speaker 3: Now from New York and San Francisco. This is Bloomberg
Speaker 3: Technology coming up. Meta goes nuclear and buys nuclear power
Speaker 3: from Constellation Energy for its AI needs.
Speaker 4: Plus Elon Musk selling five billion dollars in debt for
Speaker 4: his own AI startup, Xai, with Morgan Stanley shopping that debt.
Speaker 3: And we sit down with Drew Baglino, former Tesla executive,
Speaker 3: who's out with his new startup, Heron.
Speaker 2: But first we check in on.
Speaker 3: These markets and look energy dictating trade in many ways
Speaker 3: in the tech news, but there's energy in some of
Speaker 3: the benchmarks.
Speaker 2: We're looking at NASDAC now up six ten percent ed.
Speaker 3: This is as we see the job stub must coming in,
Speaker 3: showing resilience for US economic growth, even though the OECD
Speaker 3: had pointed to some anxiety around growth and the tariff
Speaker 3: impact earlier today.
Speaker 2: But you're looking under the hood. What's caught your attention?
Speaker 4: Yeah, that Meta nuclear deal. Meta shares slightly softer Constellation
Speaker 4: supplying the energy. The nuclear energy actually really muted gains
Speaker 4: relative to the big jump we saw in the pre
Speaker 4: market when the deal was announced one and twenty one
Speaker 4: megawatts over twenty years. This isn't just a sizeable deal
Speaker 4: to source nuclear energy for Meta in its data centers.
Speaker 4: It's bigger than the deal that Microsoft did with Constellation,
Speaker 4: and it's worth getting into the details on this.
Speaker 3: One character and we can we got the perfect person
Speaker 3: the Blueblegs will weighed is with us.
Speaker 2: The context here is important.
Speaker 3: It is bigger than the Microsoft purchase that we'd seen previously,
Speaker 3: and what does it allow Meta to do in terms
Speaker 3: of yet further energy coming from a for AI from
Speaker 3: nuclear in the future too.
Speaker 5: Well, the thing about nuclear is that it's clean. There's
Speaker 5: no carbon from nuclear power plants and wind and solar
Speaker 5: or clean and all these tech companies have these really
Speaker 5: ambitious carbon free goals. We're going to be in that
Speaker 5: zero by twenty thirty, thirty five whatever. In the last year,
Speaker 5: their power needs have climbed and they need so much
Speaker 5: electricity for all the SAYI power plants take a long
Speaker 5: time to build, so suddenly they're like turning back to
Speaker 5: gas and coal, and that's a threat to their green goals.
Speaker 5: So being able to get nuclear that's a real win.
Speaker 4: Well on the Constellation side, there's a lot of signals
Speaker 4: here of commitment upgrading and updating capacity, potentially building new capacity.
Speaker 4: What have you learned in your reporting about this company.
Speaker 5: Yeah, so that's really exciting because we don't have any
Speaker 5: big nuclear plants under construction right now. The last one
Speaker 5: was the Vocal plant to Georgia, and they finished.
Speaker 4: It was kind of a debacle.
Speaker 5: It was seven years late, it was billions over budget,
Speaker 5: and it really scared people away from wanting to do
Speaker 5: that again. Even though the rest of the country you're saying,
Speaker 5: please build us more big nuclear power plants. The only
Speaker 5: people that aren't saying that are companies like Constellation that
Speaker 5: have to write the checks for these power plants.
Speaker 4: So if they can.
Speaker 5: Line up a customer like Microsoft, like Meta, someone who's
Speaker 5: going to be willing to help them out on the finances,
Speaker 5: that's making them have more confidence about building a new plant.
Speaker 5: And Constellation said exactly that they have an NRC permit
Speaker 5: that gives them permission to do another reactor at the
Speaker 5: same Clinton side in Illinois. So there's not very many
Speaker 5: places that already have that paper. We're handled and so
Speaker 5: Constellation CEO Joe Dimingas told me last week that yeah,
Speaker 5: they're looking at it. They're looking at a lot of
Speaker 5: different options, but they're seriously considering it, and that's something
Speaker 5: we haven't heard in the while.
Speaker 4: Blim bogs will wade, Thank you very much. Let's now
Speaker 4: expand the conversations, take a look at the impact of
Speaker 4: the deal for both the technology and nuculiar power industries.
Speaker 4: Joining us as Jeffrey's analyst Brent Hill and I've done
Speaker 4: the math on it right. Basically, this deal between Constellation
Speaker 4: and Meta is about thirty five percent larger in total
Speaker 4: energy terms on constant capacity basis than the Microsoft deal.
Speaker 4: But it's worth putting Microsoft as a Meta as an
Speaker 4: operator of data centers into context versus the hyperscalers. What
Speaker 4: does that math tell you about Meta and what it's
Speaker 4: doing here.
Speaker 6: Well, Meta's playing big for the AI game.
Speaker 7: They're going to spend over sixty five billion dollars this
Speaker 7: year in CAPEX and they have one of the highest
Speaker 7: increases in terms of absolute dollars spent on CAPEX to
Speaker 7: fuel this AI generation. So they're a huge player along
Speaker 7: with the other hyperscalers. Amazon in microsoftware obviously going to
Speaker 7: spend more in capex, but the percent.
Speaker 6: Increases the highest at MATA.
Speaker 7: And I think what this deal signifies is that we're
Speaker 7: at the beginning of this aid option curve. It's going
Speaker 7: to take we're again any one if you will, have
Speaker 7: a baseball on l UH and this is going to
Speaker 7: be a multi deck guy decade transformation. I think when
Speaker 7: you look at the statistics of this transaction, right it's
Speaker 7: a twenty year deal, which puts it at the higher
Speaker 7: end of of of an energy transaction. They're pain actually
Speaker 7: more than they would for other energy. They're not building
Speaker 7: the data center near the nuclear plant. It's all virtual,
Speaker 7: so I think they're effectively as as yours your other
Speaker 7: presenter mentioned, this is an offset from a from a
Speaker 7: carbon perspective, so better for the environment. And I think
Speaker 7: they obviously want to get as much a capacity locked
Speaker 7: up as they can before others get.
Speaker 6: To that to get get to those uh that capacity
Speaker 6: and energy.
Speaker 7: So I think, I mean, there's multiple things to read
Speaker 7: in here and look at from from our side. We've
Speaker 7: talked to our energy team and and and this again
Speaker 7: goes to the longer end and longer tail. And obviously
Speaker 7: they wanted to save this facility, so this obviously gives
Speaker 7: them a chance to to basically take a facility that
Speaker 7: maybe was going to be shut down to saving it.
Speaker 3: Brent, how much anxiety have you had about energy being
Speaker 3: the blocker here to these hyperscale is meeting at the
Speaker 3: level of demand massive.
Speaker 7: I mean, I'm a tech guy, and again I was
Speaker 7: just talking to our energy team before I got on.
Speaker 6: I mean, who would have.
Speaker 7: Thought that at this point we'd all be scrambling to
Speaker 7: understand energy real estate.
Speaker 6: I mean, the.
Speaker 7: Biggest bottleneck to powering AI right now are the transmission
Speaker 7: lines from the energy companies to the data centers, and
Speaker 7: these you know, we've been told by many that are
Speaker 7: sometimes two or three years backlogged, so they can't even
Speaker 7: they can get things built, but they can't actually finish
Speaker 7: the last piece of this because their lead times are
Speaker 7: so long to get the equipment. So, I mean, we're
Speaker 7: again Microsoft has said this to us many times.
Speaker 6: When they show up.
Speaker 7: Every day, they're like it is like they're on fire
Speaker 7: the whole day, where they just can't like sit because
Speaker 7: there's so many mooky pieces to make this all work.
Speaker 7: For us to basically hit on one prompt bar and say,
Speaker 7: you know, ask a simple question, what hotel should I
Speaker 7: stay at in.
Speaker 6: San Francisco based on this budget?
Speaker 8: You know?
Speaker 6: Or whatever question you want to ask.
Speaker 7: But it's like you think about how simple the questions are,
Speaker 7: but what actually has to happen in the back end
Speaker 7: is so complex, and so we're living with massive anxiety
Speaker 7: even covering the space, trying to keep up with all the.
Speaker 3: Data pa Isn't it funny that it feels but a
Speaker 3: few weeks ago that the anxiety was that they were
Speaker 3: overbuilding and that the supply side was just getting too much.
Speaker 2: Is that a thing of the past.
Speaker 6: Brent, It's a thing of the past. I think here's
Speaker 6: the problem.
Speaker 7: We're doing third grade math and nothing against my competitors,
Speaker 7: but all my competitors put out a data point though, Hi,
Speaker 7: a data center for Microsoft is on hold, the Wisconsin
Speaker 7: facilities not coming up live, and everyone goes, hey, i's
Speaker 7: over everyone, run for the hills, sell everything, and that's out.
Speaker 6: What's happening.
Speaker 7: What's happening is we're doing this efficiently and we're going
Speaker 7: to move pieces around. But as Microsoft and others have shown,
Speaker 7: they're making money h and they're actually generating revenue growth.
Speaker 7: So it's not about just blowing money and not generating
Speaker 7: a return. It's it's it's balanced revenue growth and profitability.
Speaker 7: And I think many of the companies that we cover
Speaker 7: are signaling that they're going to be pieces that move
Speaker 7: all over and sometimes again, as I said, you can't
Speaker 7: even find the transmission lines to.
Speaker 8: Get to these dcs, so they have to move a
Speaker 8: capacity to other data centers. And so it's yeah, it's
Speaker 8: a it's a giant rubics cube that is super scrambled,
Speaker 8: and I'm not very good at a rubics cubes.
Speaker 6: So we're trying to we're trying to figure it out.
Speaker 4: Brent, neither am I to be fair, But but what
Speaker 4: you just said it makes me want to go back
Speaker 4: to the twenty year commitment with this particular nuclear deal,
Speaker 4: because you can either see it as absolute conviction of
Speaker 4: the need to source energy at those levels long term
Speaker 4: because of what AI is doing, or you look at
Speaker 4: it as a hedge the need for protection to make
Speaker 4: sure you've got the energy security if you need it.
Speaker 6: I mean, I think it's a combo of both.
Speaker 7: And again it's it's a carbon offset right from all
Speaker 7: the other ways that they're generating power.
Speaker 6: So there's there's.
Speaker 7: That, you know, environmental component that they have to be
Speaker 7: conscious of. So I think they check the box on
Speaker 7: that they lock up a facility that perhaps was going
Speaker 7: to go offline.
Speaker 6: They protect this.
Speaker 7: Power from perhaps others that we're going to get it
Speaker 7: in the AI industry. Uh, you know, there's kind of
Speaker 7: multiple you know, checkboxes.
Speaker 6: I think they get they get out of this transaction
Speaker 6: as we understand it. It's virtual.
Speaker 7: There's no like Amazon and others are are doing nuclear
Speaker 7: and putting DCS near it. As we understand that this
Speaker 7: is nothing's near it. So you know, it's a virtual deal,
Speaker 7: which again is unique. So I think there's kind of
Speaker 7: multiple threads to pull here. But again I I think
Speaker 7: what this signifies is that we are really early. It's
Speaker 7: going to have massive impacts on all of our lives
Speaker 7: across every industry, and I think they talked about this yesterday.
Speaker 7: Over the next year, Meta will be able to power
Speaker 7: full advertising AI actual campaigns, which means if you run
Speaker 7: a small business, you can say I'd like a sidewalk
Speaker 7: sale for my furniture company, and here are the pictures
Speaker 7: from the last year. I don't have to hire a videographer.
Speaker 7: I don't have to hire a creative pro whatever. You
Speaker 7: just put the pictures in. All of a sudden, it
Speaker 7: spits out, here's a sidewalk sale Thursday with the band,
Speaker 7: the wine, the cheese, and here's the discounts, and here's
Speaker 7: the video, and you do it at a fraction of
Speaker 7: the costs.
Speaker 6: I mean, this is pretty incredible what this is going
Speaker 6: to do for small businesses.
Speaker 7: And metas is enabling this small business economy to define
Speaker 7: the right customers, to generate the right campaigns.
Speaker 6: It's it's a completely different world. And again, I think
Speaker 6: we're all trying to have trying to.
Speaker 3: We're trying to have more wine and cheese with our
Speaker 3: generator AI. Brent, that's what we're trying to do. Jeffrey's analyst,
Speaker 3: Brent phil is so good to have you on just
Speaker 3: the scale of the ambition coming from Meta. Meanwhile, let's
Speaker 3: talk about what's happening with Morgan. Stanley is shopping a
Speaker 3: five billion dollar debt package for Elon Musk's AI company Xai.
Speaker 2: It's according to a source.
Speaker 3: Now, this is the latest fundraising move by the billionaire,
Speaker 3: who is also tapping markets of fresh equity across his
Speaker 3: Business Empire and most Kurt Wagner joins us some more. Look,
Speaker 3: is he looking to the debt market to finance his
Speaker 3: own infrastructure build out?
Speaker 9: I have to imagine so, because if you remember Caroline,
Speaker 9: XAI has that huge data center in Memphis, which they
Speaker 9: call Colossus. It was just I think last month that
Speaker 9: Elon Musk was out saying that, you know, they have
Speaker 9: two hundred thousand GPUs at that site, with aims to
Speaker 9: be more than a million GPUs either there or even
Speaker 9: at a site nearby. So I mean the scale at
Speaker 9: which Elon is thinking as it comes to XAI and
Speaker 9: these data centers is very massive. Obviously, as we've talked
Speaker 9: about and you know as well as anybody, this is
Speaker 9: incredibly expensive. So it's not surprising to me that he's
Speaker 9: not only out trying to raise this money via debt,
Speaker 9: but also, as Bloomberg has reported, you know, they're looking
Speaker 9: to raise money with an equity round as well.
Speaker 4: This is a lot of things happening in parallel. You
Speaker 4: have debt. What was reported yesterday by another outlet is
Speaker 4: a tender to give employees liquidity both XAI and ex
Speaker 4: employees a secondary offering and then go back to that
Speaker 4: bit Kert. What I'd heard was that as soon as
Speaker 4: that merger closed, Elon and people like Jared Birchill, his
Speaker 4: financial lieutenant, side phoning everyone and saying, if we raise
Speaker 4: some money, want to get involved. That's kind of classic
Speaker 4: Elon Inc. Play, it is, and this.
Speaker 6: Is what Elon does, right.
Speaker 9: He spends a lot of his time over in government,
Speaker 9: sort of seemingly like ruining his reputation and watching Tesla's
Speaker 9: stock tank, and then at the same time people are
Speaker 9: lining up out the door to do business with him
Speaker 9: in all of these private endeavors. As you may right,
Speaker 9: XAI Neuralink just raised over six hundred million dollars.
Speaker 6: I believe they announced that yesterday.
Speaker 9: So you know, this is someone who, because of his
Speaker 9: track record, because of his ambitions, usually has no problem
Speaker 9: getting people to give him money. I think the question
Speaker 9: is how much and where does it go right, How
Speaker 9: useful is it for him or is he just raising
Speaker 9: money for the sake of raising money. I think in
Speaker 9: this case with the XAI thing, given what he signaled
Speaker 9: publicly about the data centers and Memphis specifically, I think
Speaker 9: we can assume a lot of this would go toward
Speaker 9: building out that project.
Speaker 4: Bloom bes cut Wagon that thank you very much. Coming up,
Speaker 4: an energy startup founded by a former Tesler, ezech is
Speaker 4: aiming to transform transformers. We'll talk to the see Drew
Speaker 4: Baglino about the company's latest fundraise and his technology. Next,
Speaker 4: this is Bloomberg Technology. Increase the electricity demand driven by
Speaker 4: AI is running up a shortage of transformers. Startup Heron
Speaker 4: Power has set out to address that bottleneck with solid
Speaker 4: state transformers that help electricity in its sector scale faster.
Speaker 4: Its founder, Drew Baglino, is the high profile, long serving
Speaker 4: and now former Tesla exec who helps shape that company's powertrain,
Speaker 4: battery and energy product strategy. Delight to say, Drew joins
Speaker 4: us here in San Francisco.
Speaker 10: Thanks for having me ed.
Speaker 4: A lot of people were waiting to see what you
Speaker 4: would do in your life after Tesla. It is Heron
Speaker 4: and Heron Power. What is the technology and what's the goal. Yeah.
Speaker 11: Heron Power's goal is to build grid scale power solutions
Speaker 11: to an accelerate and all electric future. The technology is
Speaker 11: basically leveraging the bleeding edge of power semiconductors to go
Speaker 11: directly from all the new energy technologies that are out there.
Speaker 4: They're all DC.
Speaker 11: This is solar batteries, data centers, and they got to
Speaker 11: get to a grid which is ac alter current. And
Speaker 11: we're going to do that without transformers, fully with power electronics,
Speaker 11: high frequency modular power electronics that we're designing here in California.
Speaker 4: You're talking about the cussing age of semiconductors in that field.
Speaker 4: We often, for example, talk about silicon carbide on this show. Yeah,
Speaker 4: but what did if you just give the backstory, did
Speaker 4: you design this technology? Are you working with someone who did?
Speaker 4: We're developing it in house.
Speaker 11: We're taking the best known topologies for advanced power electronics.
Speaker 11: There's a lot of great academic work actually in this
Speaker 11: space and applying them to the grid scale power electronics problem. Historically,
Speaker 11: the way it's been done is you have a low
Speaker 11: voltage converter inverter. Rectifier has lots of different names, going
Speaker 11: from somewhere around one.
Speaker 4: Thousand vold STC.
Speaker 11: That's what batteries are as a solar is data centers
Speaker 11: will be in the future. In fact, on this show
Speaker 11: and video talked about a intervolt power electronics their data
Speaker 11: center did. Yeah, and you know you'd go through a
Speaker 11: low voltage inverter so you'd end up with AC at
Speaker 11: four eighty or six hundred volts, and then you need
Speaker 11: one of these old school you know, grain orients and
Speaker 11: electric steel oil field transformers to get up to thirty
Speaker 11: four thousand volts, And we're going to do it directly
Speaker 11: without the use of a transformer.
Speaker 3: Drew, Who is it you're disrupting here at the moment?
Speaker 3: Is it old school electricity players?
Speaker 2: Is it the Schneider Electrics? Is that the zeemans? Who
Speaker 2: is it that you're really taking on here?
Speaker 10: Yeah?
Speaker 11: I think we're trying to provide a more efficient, more compact,
Speaker 11: more scalable solution. And there's actually a lot of players
Speaker 11: in this space. You've got switch gear providers, You've got
Speaker 11: lots of different transformer providers, there's a lot of honestly
Speaker 11: like no name power electronics providers and some bigger name players,
Speaker 11: and so it's a little bit of everyone, I would say,
Speaker 11: But really, when I zoom out, electricity growth is poised
Speaker 11: to triple over the next couple of decades, and that's
Speaker 11: not just due to AI but also electrication of vehicles, buildings,
Speaker 11: everything else. And so there's going to be room for
Speaker 11: many players to support this growth.
Speaker 3: Drew give us that wider context because we started off
Speaker 3: the show by talking about meta looking and locking in
Speaker 3: nuclear energy for its future AI needs. How much of
Speaker 3: a bottleneck is energy? How much of a bottleneck is
Speaker 3: just the infrastructure that you're trying to rework. How much
Speaker 3: do we blame well incidents like the Spanish blackout on
Speaker 3: not modern enough infrastructure.
Speaker 11: Yeah, the electricity sector is poised at an interesting inflection point.
Speaker 11: It's really the confluence of three major trends. First, you've
Speaker 11: got demand. For the first time in decades, there's actually
Speaker 11: robust electricity demand, and that's due to number of factors.
Speaker 11: You've got electrification of buildings, transportation, You've got AI. You
Speaker 11: actually have a lot of new manufacturing load, which is
Speaker 11: exciting to see that coming into the United States and
Speaker 11: other developed countries.
Speaker 4: On the same time, you've got supply.
Speaker 11: In fact, abundant clean renewable energy is growing at explosively.
Speaker 11: To be honest, in twenty twenty four, over five hundred
Speaker 11: gigawatts of the utility scale solar was deployed. That's over
Speaker 11: half a trillion of capital investment in solar that year alone,
Speaker 11: and that number was up thirty percent year over year.
Speaker 11: So massive increase and abundant potential supply. And then the
Speaker 11: last thing is aging infrastructure, especially in the developed economies.
Speaker 11: You know, over half of the infrastructure that's out there
Speaker 11: is over thirty years old, some of it's forty five.
Speaker 4: Question drew, So to interrupt, who is your customer if
Speaker 4: you want to fix the entire grid? Who are you
Speaker 4: selling to?
Speaker 11: Initially we're selling to energy project developers and data centers
Speaker 11: at center builders like yeah. So actually we have later
Speaker 11: letters of intent signed with Cruso, interesting leading AI data
Speaker 11: center developer and cloud services provider. And we also have
Speaker 11: a letter of intent signed with Intersect Power, one of
Speaker 11: the largest renewable energy developers.
Speaker 4: Working with Google in the US. I think they are you.
Speaker 4: I'm going to ask you how you view test energy
Speaker 4: business right in the context of Heroin you were an alumni,
Speaker 4: But do you expect to work with Tesla on the
Speaker 4: kind of storage and so the side certainly possible.
Speaker 11: We haven't had discussions, but I look forward to having
Speaker 11: discussions in the future if it makes sense.
Speaker 4: But the door wouldn't be closed for any reason.
Speaker 11: That I that I could see. I mean, again, I
Speaker 11: think this is a huge problem. It's a massive sector,
Speaker 11: trillions of investment over the coming years. There's opportunity for everybody.
Speaker 11: But yeah, I think Tesla Energy has done an amazing job.
Speaker 11: I mean, obviously I put a lot of my time
Speaker 11: in there over the past decade. If you go back
Speaker 11: to twenty fourteen, you know, utility scale stage storage didn't exist,
Speaker 11: I mean, residential batteries didn't exist.
Speaker 10: And now in.
Speaker 11: Twenty twenty four over fifty gigawatts of utility scale storage
Speaker 11: was deployed around the year and in capex of like
Speaker 11: forty billion dollars. That's massive, and that year itself, I
Speaker 11: think was almost a doubling of deployment. So really at
Speaker 11: the beginning of the energy storage wave, and I expect
Speaker 11: Tesla Energy to continue to grow quickly.
Speaker 4: You were the longest serving person at Tesla, basically behind
Speaker 4: Elon for a really long time, which you just kindly
Speaker 4: share some insight in how it works at Tesla. You
Speaker 4: were one of sort of three stated executive officers. But
Speaker 4: the thing that I learned in my reporting is there's
Speaker 4: a really deep bench of talent, particularly on the energy side.
Speaker 4: At a time where everyone talks about Elon must looking
Speaker 4: elsewhere and being distracted.
Speaker 11: Yeah, I mean, I'm super proud of what you know,
Speaker 11: the Tesla team and myself and others were able to
Speaker 11: contribute to over the past two decades. Again, we talked
Speaker 11: about the energy business from zero to nothing, but I
Speaker 11: mean zero is something amazing. But I think we shouldn't
Speaker 11: overlook the contributions that Tesla provided to the EV space. Again,
Speaker 11: in twenty fourteen, maybe there was one hundred thousand total
Speaker 11: evs and last year of ten million. More than ten million.
Speaker 11: I mean, that's three hoors of magnitude. It's impressive and
Speaker 11: continuing to grow. And Tussel didn't just do it itself right,
Speaker 11: it encouraged many newcomers to enter the space, and I
Speaker 11: think that speaks to the capability of the team there.
Speaker 11: You know, it's a really strong team and I look
Speaker 11: forward to what they continue to do in the future.
Speaker 11: In fact, I just got a new model y and
Speaker 11: I got to say it's an incredible improvement over the
Speaker 11: model I got in twenty twenty during the head of COVID.
Speaker 4: Drew Baglino, founder CEO of heron power, thank you so
Speaker 4: much for your time on Bloomberg Technology. It's time now
Speaker 4: for talking tech and first up, Jaomi's ev business is
Speaker 4: expected to turn profitable by the second half of the year.
Speaker 4: That's according to founder Lee June. It's Su seven sedan
Speaker 4: has enjoyed strong sales, even in the cutthroat market where
Speaker 4: rivals have been slashing prices. Taiwan Semi Conductor Manufacturing has
Speaker 4: blamed the traffic for delays building out its plant in
Speaker 4: Southwest Japan. Companies pushing ahead with plans to expand abroad
Speaker 4: in the face of geopolitical tensions and rising demand for
Speaker 4: Nvidio chips. C C Way CEO also reaffirm TSMC's commitment
Speaker 4: to spend another one hundred billion dollars on its Arizona plant,
Speaker 4: and Microsoft is cutting hundreds more jobs, just weeks after
Speaker 4: its largest layoff in years. A Microsoft spokesperson said the
Speaker 4: latest cuts are in addition to the six thousand announced
Speaker 4: last month.
Speaker 2: Welcome back to Bloomberg Technology. I'm Caroline Hide in New York.
Speaker 4: And I'm ed love Lo in San Francisco. The market's carroc.
Speaker 2: They are rebounding somewhat ed.
Speaker 3: We had some anxiety around that OECD forecast for slower
Speaker 3: growth on the back of tariff, but now.
Speaker 2: Well it's full steam ahead on the nasdak at.
Speaker 3: Least SUT six ten percent large thanks to Jolts.
Speaker 2: Job opening is looking steady.
Speaker 3: The macro picture a good news signal for today, but
Speaker 3: so too as some of the chip performances. Let's just
Speaker 3: dig into individual movers in Viniar, I mean a cool
Speaker 3: one hundred billion dollars added in market cap one day alone,
Speaker 3: We're up three point two percent. That helps to the benchmark,
Speaker 3: but so do does a new record high for Broadcom. Look,
Speaker 3: we've got their earnings coming out after the bell on Thursday,
Speaker 3: and it's looking excitedly to the AI products. And look,
Speaker 3: we just got newser one Dinabas our colleague writing about
Speaker 3: Tomahawk's six chip switches switch chips. This is about making
Speaker 3: AI accelerator is that much more efficient ed and it's
Speaker 3: leading an acceleration in the stock.
Speaker 2: More broadly, Meta down s extents of Ascent. We've been
Speaker 2: talking all.
Speaker 3: Along about the fact that they are turning their attention
Speaker 3: to nuclearive power. Their AI desires need the infrastructure, and
Speaker 3: we're seeing a build out a twenty year contract with
Speaker 3: Constellation at the moment.
Speaker 2: Let's get back to Meta.
Speaker 4: Yeah, it's our top story. Meta says it's reached a
Speaker 4: deal to purchase nuclear power capacity from Constellation Energy, all
Speaker 4: in on an effort to keep up with the soaring
Speaker 4: demands of energy to power artificial intelligence. Here were more
Speaker 4: bloombergs Riley Griffin on the Meta side the metabat Earlier
Speaker 4: in the program, we talked about the size and scope
Speaker 4: the numbers. This is a bigger energy supply deal than
Speaker 4: Microsoft did with Constellation. But I think we haven't yet
Speaker 4: answered the question why is Meta doing this.
Speaker 10: It's a great question, and it's worth noting here that
Speaker 10: this is Meta's largest power agreement to date. While we
Speaker 10: don't have the specific financials, they've told us that. And
Speaker 10: really this is about driving power for its data centers,
Speaker 10: for its AI ambitions as metas demand for this really surges.
Speaker 3: Let's talk about their ambitions, Roddy, because then now a hypiscala.
Speaker 4: Why.
Speaker 10: Yeah, they are hoping to dominate the AI race. They're
Speaker 10: competing not just with social media companies, which they're known for,
Speaker 10: but with the open ais and anthropics of the world
Speaker 10: and the Microsoft's. This is a fast moving race. They
Speaker 10: are quickly scaling. They've said this year that they are
Speaker 10: going to spend as much as seventy billions plus in capex,
Speaker 10: A lot of that dedicated to AI infrastructure, and this
Speaker 10: twenty year deal is about assurances.
Speaker 12: While energy will start coming in.
Speaker 10: In twenty twenty seven, they want some mere term assurances
Speaker 10: that the grid will remain reliable, stable, and this was
Speaker 10: an effort to do that in part because Constellations plant
Speaker 10: was at risk of closure. According to Meta's head of
Speaker 10: Global Energy, we.
Speaker 3: Want to thank you so much for bringing us the
Speaker 3: latest on all things META Whenimberg's Rydy Griffin appreciate it.
Speaker 3: Let's talk about the theme when it comes to vcs
Speaker 3: as well. Actually, in the current economic environment, we're seeing
Speaker 3: them raising funds and some to tackle this new age
Speaker 3: of energy demand and indeed climate solutions. At the same time,
Speaker 3: Energize Capital just closed its Ventures.
Speaker 2: Fund three totally four hundred and thirty million dollars.
Speaker 3: To scale digitally enabled climate solutions. Let's bring in John Tuff,
Speaker 3: managing partner of Energized Capital, and John speak to the
Speaker 3: theme that we were just talking of the need for
Speaker 3: AI brings through a whole other power demand picture that
Speaker 3: we're seeing a turn to nuclear. Where does startups come in?
Speaker 12: You know, that was the perfect leading for energize.
Speaker 13: The energy demand narrative across the US right now and
Speaker 13: globally is unparallel, and it's the answer to the power.
Speaker 12: Where's the power come from? Isn't all the above?
Speaker 13: It is natural gas, it is solar, its wind, its batteries,
Speaker 13: it's all the technologies energize capital. At our HeartWare Climate
Speaker 13: Solutions investment firm, we look at investing in the intersection
Speaker 13: of software and climate, and our belief is that there
Speaker 13: are these amazing mega trends. There's data centers, there's AI,
Speaker 13: there's energy transition and mobility, there's circular economy reshoring all
Speaker 13: these areas, and generally we look to find ways to
Speaker 13: index to those mega trends in a capital light way.
Speaker 13: And the energy transition is the most exciting of them
Speaker 13: all right now, like full stop. The amount of capital
Speaker 13: going into the space, the amount of uncertainty and complexity,
Speaker 13: it will reward specialists firms, It will reward specialist investors,
Speaker 13: and that's who we are in.
Speaker 4: The space, specialist and emphasis on software because what we're
Speaker 4: talking about right not just the Constellation meta news, but
Speaker 4: Drew Maglino on earlier right with his new company Heron,
Speaker 4: we're talking scale that's in the billions and billions and
Speaker 4: billions of dollars raised, a really big fund, But you're
Speaker 4: looking at the earlier stage. How do you find something
Speaker 4: that's worthwhile when all of that scale of activity is
Speaker 4: going on.
Speaker 12: Yeah, that's a great question.
Speaker 13: The way we've thought about it is the energy transition
Speaker 13: is today, and so there should be budget today. We're
Speaker 13: not looking for these technologies that will be ready in
Speaker 13: ten or twenty or thirty years. If you have a
Speaker 13: great solution in software, we should be able to find
Speaker 13: a customer for you today that we can diligence. And
Speaker 13: so we're actually seeing inverse of some of the public
Speaker 13: press these days, is companies are getting much bigger, faster
Speaker 13: in the energy and climate transition moment, especially in the
Speaker 13: software layer where they can scale, not just in the
Speaker 13: US where there's energy demand, but you know internationally as well,
Speaker 13: where there may be a few more markets that are
Speaker 13: more favorable to some of these new technologies.
Speaker 4: Where are these companies geographically.
Speaker 13: Yeah, so historically about a third of our investments have
Speaker 13: come outside the US, but we are predominantly US in
Speaker 13: terms of where we focus. The US is still the
Speaker 13: innovation hotbed for the energy transition. And what I like
Speaker 13: to say is that you know, demand requires innovation, and
Speaker 13: this is the economy of demand. This is the economy
Speaker 13: where we're looking for the next generation tools to serve
Speaker 13: these ai the hyperscalers like you mentioned, to serve the
Speaker 13: complexity of the grid and generally, if we can solve
Speaker 13: it here, those technologies do emerge in other areas around
Speaker 13: the world.
Speaker 3: Yeah, John, just talk to us about how you're seeing
Speaker 3: around the world work, how you're seeing the startup ecosystem
Speaker 3: build out, whether you actually just really want to bring
Speaker 3: it into home where you allocate the money.
Speaker 12: Yeah.
Speaker 13: Yeah, So for us, the international markets have been a
Speaker 13: source of great deals, just as we said before, but fundamentally,
Speaker 13: even when we partner with those European firms, they're looking
Speaker 13: for access to the US markets. This is the area
Speaker 13: of you know, American energy dominance has become the theme
Speaker 13: and it's real. You know, there's big budgets there, there's
Speaker 13: people in the there's firms in the technology space spending
Speaker 13: more money.
Speaker 12: Than utilities and capex, and so.
Speaker 13: What we're doing is we're trying to find these amazing
Speaker 13: companies who can serve the space, help them scale. You know,
Speaker 13: to fifty one hundred and two hundred million of revenue
Speaker 13: and beyond and ultimately be successful public public firms. One
Speaker 13: of those examples, just to hit on at home, is
Speaker 13: the firm called Nearer Energy, a great example of energized thesis.
Speaker 13: We you know, we love the concept of a complex
Speaker 13: energy grid. There's there's natural gas going on, and there's whin,
Speaker 13: there's solar and the other side of the equation. We
Speaker 13: have data centers, we have big new buildings, we have electrication, mobility,
Speaker 13: all taxing the grid. NIRA finds a way to aggregate
Speaker 13: all of that complexity and make interconnection QUEU management, you know,
Speaker 13: recommendations for the grid operators, incredibly powerful software AI based
Speaker 13: you know, a y now moment, and we're excited to
Speaker 13: back them.
Speaker 3: What's interesting, you've been allocated as you talk already from
Speaker 3: the fund near at TIBA another one when it comes
Speaker 3: to battery software, John, But the LPs, you've actually got
Speaker 3: some energy infrastructure players, all sort of school ones.
Speaker 2: Do you even ova among them giving you money? What
Speaker 2: do they want in in it?
Speaker 12: Yeah?
Speaker 13: So we're fortunately have this really big swath LP base
Speaker 13: about eighty percent of our LPs, our institutional pension funds
Speaker 13: and doowments o CIOs, and we're also very lucky to
Speaker 13: have this kernel of you know, traditional industrial technology firms
Speaker 13: like like gie Vernova. You know, GE's powering the future
Speaker 13: of a lot of the energy transition and so for us,
Speaker 13: they're a fantastic capital partner and insights partner to help
Speaker 13: us reach you insights into this market in the States
Speaker 13: and also globally. So it's very much a symbiotic relationship
Speaker 13: on how we can return great capital returns but also
Speaker 13: good insights.
Speaker 4: John Toff, Managing partner of Energized Capital. Great to have
Speaker 4: you on the show. Thank you know. Coming up, Trump
Speaker 4: Media has raised two point four to four billion dollars
Speaker 4: to create a bitcoin treasury. We're going to discuss the
Speaker 4: rise of these types of reserves next. For the least
Speaker 4: Clean from still Mark. This is Bloomberg Technology. Trump Media,
Speaker 4: the company behind Truth Social, has raised two point four
Speaker 4: to four billion dollars to buy bitcoin for its treasury.
Speaker 4: It's one of a growing number of companies following Michael
Speaker 4: Sailor's bitcoin buying model at Strategy for More. I want
Speaker 4: to bring in Lease Colleen. She's GP and managing partner
Speaker 4: of still mark, what is the logic, particularly if you
Speaker 4: are the parent company of a social media platform.
Speaker 14: In doing this, we've seen several companies enter the strategy
Speaker 14: recently to become bitcoin treasury companies bitcoin acquirers as their
Speaker 14: core focus. It's important to differentiate that from companies that
Speaker 14: have added bitcoin to the treasury for the purpose of
Speaker 14: diversification or growing the treasury, and the market is differentiating
Speaker 14: between the two. The relative size of the bitcoin treasury
Speaker 14: is important for how it's valued by the market. So
Speaker 14: for bitcoin treasury companies, what we have seen is that
Speaker 14: the market provides differentiation across a few measures. So first
Speaker 14: we see the method to acquire bitcoin being important. Is
Speaker 14: debt used? Is equity sold? And what are the terms
Speaker 14: of the debt. I've also seen that brand and trust
Speaker 14: in the management team is important, and I think as
Speaker 14: a space matures, having a bitcoin business that generates yield
Speaker 14: across market cycles will also be Valudle.
Speaker 4: That's interesting though, because that name is particularly volatile from
Speaker 4: its equity perspective. From the stock story, what does it
Speaker 4: tell you about bitcoin? You know that it's held on
Speaker 4: a balance sheet in treasury. That the long term view
Speaker 4: of what will happen with bitcoin.
Speaker 14: It says that bitcoin has really matured. So with the
Speaker 14: introduction of bitcoin and the acceptance of the Bitcoin spot ETF,
Speaker 14: we saw the Wall Street investors really identify bitcoin as
Speaker 14: an asset that belongs in people's portfolios, institutional portfolios, and
Speaker 14: that is different and distinct from other crypto assets. Now,
Speaker 14: as bitcoin has matured, the bitcoin treasury strategy is doing
Speaker 14: the same. Of course, this is something but is multiple
Speaker 14: players enter We are beginning to understand how the market
Speaker 14: will value this strategy. We've seen the emergence of new metrics.
Speaker 14: In fact, and in early May, Blockstream CEO introduced a
Speaker 14: really interesting metric for evaluating bitcoin treasury strategy companies and
Speaker 14: their execution and that's pace of m nav cover And
Speaker 14: so what that means is well, taking a step back,
Speaker 14: m nav is a metric that measures companies bitcoin net
Speaker 14: asset value. It's calculated by dividing enterprise value by the
Speaker 14: company's bitcoin NAV and months to m nav cover is
Speaker 14: a measure of the pace with which a company can
Speaker 14: acquire bitcoin to justify the premium. So if the market,
Speaker 14: if the market notes that a company has grown their
Speaker 14: bitcoin per share two x over the past eighteen months,
Speaker 14: for example, as micro Strategy has that can justify to
Speaker 14: xpunium at least.
Speaker 3: What's interesting is, of course you've been in this game
Speaker 3: for a very long time, nor meaning to age. You've
Speaker 3: been like twenty thirteen, that was just five years after
Speaker 3: the white paper on bitcoin, and you come in starting
Speaker 3: studying it from an institutional perspective. The store of value
Speaker 3: we now see being played out in terms of having
Speaker 3: it on treasury, but what about actually as a decentralized
Speaker 3: finance use case as well, because that's where you've been
Speaker 3: focusing investments.
Speaker 14: We've seen companies in the bitcoin as a store of
Speaker 14: value and investment space be pulled into providing other services
Speaker 14: and a more full banking experience for their user base,
Speaker 14: both for retail users and for institutional clients. By that,
Speaker 14: we've seen users demand and successfully received from these companies'
Speaker 14: tools for lending, for borrowing, for yield generation, so that
Speaker 14: they can be fully banked by their bitcoin providers, the
Speaker 14: companies that they've trusted to onboard to bitcoin with. Now,
Speaker 14: what we're seeing as the technology as technologies have matured,
Speaker 14: is the introdiction of not just traditional finance tools but
Speaker 14: also DeFi tools. Those that have been tested and seeing
Speaker 14: early product market fit in crypto spaces have matured to
Speaker 14: launch on bitcoin to provide to centralize finance all the
Speaker 14: same borrowing lending, but in a manner in which is
Speaker 14: more consistent with crypto principles ematuration.
Speaker 3: Elise Colleen, founder, a managing partner at Stillmark, we appreciate
Speaker 3: you on all things bigcoin.
Speaker 2: Snowflake.
Speaker 3: It is in full summit mode this week, which means
Speaker 3: it is making a slower product and M and A announcements.
Speaker 3: One of those is his acquisition of Crunchy Data. It's
Speaker 3: a provider of trusted, open source postcress technology and products
Speaker 3: that's basically for data management. I've caught up with a
Speaker 3: Snowfake CEO, shoot A Ramaswami at the start of the
Speaker 3: summit on this news.
Speaker 15: All applications that require backing stores we call them transactional stores,
Speaker 15: and Crunchy Data is really about providing a world class
Speaker 15: postcraft offering for customers.
Speaker 6: Right within Snowflake.
Speaker 15: If you think of creating an agent KI application, you
Speaker 15: need someplace to store those interactions to then retrieve them
Speaker 15: to answer follow on questions. That's what Country Data does.
Speaker 15: It is an enterprise grade database that's going to make
Speaker 15: it much easier for developers to create applications including agentic
Speaker 15: ones on top of snowflick.
Speaker 2: What is it like doing M and A right now?
Speaker 2: How do those conversations start? How willing do you think
Speaker 2: the investor base is to see it?
Speaker 15: I think investors are open to M and A and
Speaker 15: we are pretty thoughtful in how we do acquisitions. We
Speaker 15: don't do reckless multi billion dollar acquisitions. By bringing in
Speaker 15: products that serve a clear product need, quickly integrating them
Speaker 15: taking them to market, we're doing a really good job
Speaker 15: with acquisitions. Obviously with the Neva acquisition that I came through,
Speaker 15: that technology went into making Snowflake an AI powerhouse, and
Speaker 15: a more recent acquisition, Datavolo, is going to come out
Speaker 15: as open Flow, which is going to make it really
Speaker 15: easy for our customers to bring data both from unstructured
Speaker 15: data systems think SharePoint, think Google Drive, and so much
Speaker 15: more and make it really easy for them to bring
Speaker 15: data and cruntry data. Is next in the series of
Speaker 15: acquisitions that is going to fulfill a big open.
Speaker 4: Need that we have.
Speaker 15: We feel good about the acquisitions that we're doing and
Speaker 15: the value that help us create for both our customers
Speaker 15: and also for our investors.
Speaker 2: MNA brings in talent too.
Speaker 3: Look, that's how you came to Snowflake and have become
Speaker 3: the ultimate CEO. I'm interested by how you are building
Speaker 3: up the talent base right now. You've been hiring a lot.
Speaker 3: What about four hundred workers of late larger sales and marketing.
Speaker 2: Is that the area need to be fund.
Speaker 6: Well.
Speaker 15: We continue to hire pretty briskly. There are variations quarter
Speaker 15: to quarter. I wouldn't look too much into that. We
Speaker 15: feel really good about our business, so we are hiring
Speaker 15: in all the key functions in engineering and product for sure,
Speaker 15: but also in sales and marketing because we feel good
Speaker 15: about our ability to turn that into into revenue. Our
Speaker 15: company is still growing exceptionally well. We guided to twenty
Speaker 15: five percent for the year and showed no deceleration from
Speaker 15: Q four to Q one. All of that wants to
Speaker 15: make us invest in the business. We're also responsible. We
Speaker 15: practice what we preach. There are a lot of agentic
Speaker 15: AI applications inside Snowflake that is making us all me included,
Speaker 15: more efficient in terms of how we do our day
Speaker 15: to day jobs. It's that combination of being right at
Speaker 15: the center of the enterprise AI revolution combined with this
Speaker 15: willingness to use AI ourselves to make things smart efficient
Speaker 15: that make us really feel good about the future of
Speaker 15: that's gonna.
Speaker 4: Snowflake CEO Shreida Ramaswami. Let's take a look at HPE shares.
Speaker 4: This is its schedule to report second quarter results after
Speaker 4: the market close today. Morgan Stanley expects a mixed report,
Speaker 4: especially for the company's server business. The firm noted and
Speaker 4: uncertain backdrop given tariffs, but said there was a flaw
Speaker 4: under the stock given Elliott Investment Manager's stake in the company.
Speaker 4: AI story as well.
Speaker 3: Cara, Yeah, and another earnings one for you at CrowdStrike
Speaker 3: Releasing and he's after the market close. That Alice a
Speaker 3: pretty optimistic Redbush, for example, raising its target price ahead
Speaker 3: of the report.
Speaker 2: For more and what to expectlet's.
Speaker 3: Bring a blue meg Intelligence is Mandat sing I can't
Speaker 3: believe it's been almost a year since the disaster for
Speaker 3: CrowdStrike taking so many people offline.
Speaker 2: How are they looking now?
Speaker 16: I mean they have recovered well in terms of, you know,
Speaker 16: making sure they don't ended up losing a lot of customers.
Speaker 16: So at the same time, when I look at the
Speaker 16: net new err, which is a key metric they report on.
Speaker 16: It's still negative, so it's not as if they've been
Speaker 16: adding more business than they were adding a year ago.
Speaker 16: Sot net. Look, there are a lot of changes happening
Speaker 16: in the cybersecurity space because of generative AI. I mean,
Speaker 16: think of all the AI agent deployments at the enterprise level.
Speaker 16: What they're really fearful off is data leaking to these
Speaker 16: large language models, and that's where data security becomes paramount.
Speaker 16: That's where CrowdStrike comes in. So nobody has really talked
Speaker 16: about AI in a big way. Two Alta has mentioned it.
Speaker 16: Z Scaler actually saw a sequential acceleration. So what interesting
Speaker 16: is CrowdStrike, which has got more exposure to SMBs. How
Speaker 16: to have they managed given the volatility in.
Speaker 4: The quarter, Mandy, I'm very excited to talk with you
Speaker 4: about meta securing one and twenty one megawatts capacity nuclear capacity.
Speaker 4: You put a react out. I'm not surprised you did
Speaker 4: go straight to inference and I'm not surprised you did.
Speaker 4: Can you just give us your thesis?
Speaker 16: I mean, look, everyone has called out reasoning being the
Speaker 16: primary driver of additional compute. They're not talking about scaling,
Speaker 16: laws and training anymore. It's all about reasoning at the
Speaker 16: time of you know, submitting the query that the model
Speaker 16: is thinking a lot more. And in the case of Meta,
Speaker 16: they're serving three billion monthly active users. If they have
Speaker 16: to roll out generative AI to this three billion monthly
Speaker 16: active user base like Google has done with AI overviews,
Speaker 16: they need a lot of compute. And that's why, even
Speaker 16: if you think training is not as much of a driver,
Speaker 16: inferencing and reasoning is a driver because of the power density.
Speaker 16: And look, they're trying to get as much energy as
Speaker 16: they can because they've raised their capex. They've got a
Speaker 16: lot of Nvidio GPUs. How do you utilize those GPUs
Speaker 16: one hundred percent capacity? You need the power and so
Speaker 16: they're just being proactive here in terms of sourcing that.
Speaker 2: Power thirty seconds.
Speaker 3: How much can to look to different ways of using
Speaker 3: infrastructure like we had Grocon recently, which are trying to
Speaker 3: be the chip for inference that.
Speaker 2: Is less power hungry than an Nvidio for exap.
Speaker 16: Yeah, look in video will tell you they are optimizing
Speaker 16: for power in their latest black LL chip as well.
Speaker 16: So clearly everyone is trying to solve the power equation.
Speaker 16: But there is nothing like having the power source to
Speaker 16: their data center. And you know that's a good situation
Speaker 16: to be in, especially when you're spending seventy billion dollars
Speaker 16: a year, which is three times your historical capex, so
Speaker 16: you don't want power to be the bottomneck.
Speaker 4: Those are the numbers that matter, Bloomberg Intelligence Senior Analyst
Speaker 4: Man Deep saying, with the bi react on that metadal.
Speaker 4: That does it for this edition of Bloomberg Technology.
Speaker 2: Do not forget to check out the podcast.
Speaker 3: You'll find it on the terminal as well as online
Speaker 3: on Apple, Spotify, and iHeart.
Speaker 2: And we're flying out to you in a few hours time.
Speaker 2: End can't wait to be back in San Francisco for
Speaker 2: the summit. This is Bloomberg Technology.